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“ if money market hedging produces very different results than forward contracts then speculators could make money without taking risk’
Can you please explain how by entering into a forward contract at the same time allows profit making? Like what exactly happens?
But I do explain this in my free lectures on money market hedging!!!
You could set up a money market hedging arrangements and at the same time arrange to convert the money at the end back using forward rates and in that way make a profit.
That cannot happen in real life and is why the forward rates are determined by the relative interest rate.
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